Saving money seems to be the most daunting financial task that we have to learn how to do. Despite watching our checks disappear with every ten dollar lunch and Nordstrom Rack weekend sale, we still lack the resolve to keep our money where it looks the best, in our accounts. Starting is always the hardest part in anything we do, however, starting to save money will feel more rewarding than a cheat day after a diet consisting of vegetables you can’t even pronounce.
Money market savings accounts are the fast start you need in order to start seeing more of the income you’re earning. Here are a few reasons why you should consider opening a money market account.
Why a money market account rather than a normal savings account?
Nothing is worst than putting a decent amount of money in a savings account and coming back to see that you’ve only earned seventy-five cents in interest from your initial deposit.
Although money markets may ask for a bigger opening deposit, the interest rates tend to be higher than your average savings account. People will be more likely to save money if there is a higher balance posted every time they check their account. You’re literally making money by leaving your savings in one place.
Unlike certificates of deposits, your money will not be locked into a money market. The account can be closed at anytime. So for those tough financial situations you won’t have to worry about paying a hefty fee for withdrawing your funds.
Money market accounts are the perfect option to put a substantial amount of money in because you can receive a decent return during the duration you have the account open but the money is liquid and can be withdrawn whenever you see fit. You can also make transfers into your checking account with a money market, however, you may be charged a fee if the transfers are too frequent. (FDIC’s Regulation D states that a savings/money market account holder is only permitted six transfers a month. Depending on the financial institution you may be charged a fee earlier than the six that’s permitted.)
The term Money Market may seem intimidating because people may associate the same risk of the stock market to money markets. The interest rates of money market accounts are dependent on how our economy is doing, therefore the FDIC insures as much as $250,000. So no matter what happens within the market your money is safe, well $250,000 of it at least.
Money markets aren’t as terrifying as some may believe them to be. Make sure to shop around for the best interest rates from your local banks. With a little research and commitment saving money will become second nature and you’ll be well on your way to financial freedom.
Money Buffalo’s Money Market Recommendations
Keeping all your cash in a traditional checking or savings account, might earn 0.06% (0.01% with a national brick and mortar bank). Money market accounts allow your money to work harder without having it locked up in a CD or the stock market.
If you are interested in earning a higher interest rate with your money and with the option to access your cash a moment’s notice (i.e. an emergency) penalty-free.
I personally bank at the following financial institutions:
Capital One 360
I’ve been a Capital One 360 member for over 10 years when they were still ING Direct. It’s where my wife and I keep our emergency fund.
Capital One 360’s current Money Market rates are:
$10,000 or more: 1.20% APR
$0-$9,999: 0.60% APR
USAA is one benefit I enjoy from growing up in a military family. We use them for our insurance needs and I also have an online bank account and rewards credit card with them.
The current USAA Money Market rates start at 0.20% with a balance of at least $10,000.
This week’s post was written by Alan Burton. He’s a renown penny pincher and has years of experience in the banking industry. Today, he’s using that knowledge to help readers save as much money as possible. You can also find him at https://www.alanorlandoburton.com/